Economists: Obamacare’s impact on jobs likely to be minimal

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Daniel S. Hamermesh is an economics professor at the University of Texas at Austin and author of Beauty Pays, in which he concludes that attractive people enjoy many advantages while those who are less attractive often face discrimination.

WASHINGTON — Texas’ two senators and many other critics of the Affordable Care Act keep saying it will cost America jobs just when it needs them the most.

Sen. Ted Cruz said last weekend that the law “hands down, is the biggest job killer in this country.”

But that’s not happening yet — and probably won’t, say labor economists, nonpartisan experts and some Dallas-area business leaders.

“The net result on jobs likely will be negligible,” said University of Texas economics professor Daniel Hamermesh, lauded worldwide for his “fundamental contributions to the analysis of labor demand.”

It’s true, say Hamermesh and other economists, Obamacare will create some incentives to reduce hours or trim workforces, since insurance costs could rise. But they say the law will also benefit many of those same companies, leading to new jobs and longer workweeks for some.

How exactly will that balancing act pan out?

“It’s impossible to say for sure,” Hamermesh said, adding the effects should largely cancel each other out. “We’d really just be guessing.”

But Sherry Miller of Park Place Dealerships in Dallas isn’t guessing.

Yes, Obamacare will probably increase the cost of her firm’s benefits, she said. But she said those new costs won’t prompt the company to hire fewer workers or push some of its roughly 1,700 full-time employees into part-time positions.

A healthier, more stable and committed workforce is key to the company’s growth, she said. Health coverage is part of that.

“It goes to our culture,” Miller said. “We hire a lot of very talented people and we want to do everything we can to take care of them, to see that they invest in themselves and stick with us.”

Hamermesh said the pressure to add workers will come in part because workers will value full-time status more if it comes with health benefits. Workers should then be more willing to trade wages or other benefits, and that creates leverage for the firms in the labor market that could save them money and lead to more hiring.

“That’s not something that has been addressed by anybody, but it will drive costs down,” he said.

Experts say those kinds of counterbalancing elements are found throughout the law. Beginning in 2015, companies with at least 50 workers will be fined if they don’t offer coverage plans to employees who work at least 30 hours a week.

Elected officials opposed to Obamacare say they continue to hear stories of firms cutting hours or jobs as a result of those new thresholds, though they won’t take effect until 2015.

Rep. Jeb Hensarling, R-Dallas, said in an interview last week that “not a day goes by” that his office doesn’t get a letter from someone whose hours have been cut or has been laid off as a result of Obamacare.

Others argue that to stay south of the 50-worker threshold, companies will simply shed workers or refuse to grow.

“As of last week more than 300 different employers had cut work hours or jobs or otherwise shifted from full-time to part-time staff — all because of Obamacare,” Sen. John Cornyn, R-Texas, said in a Sept. 24 speech, citing a tally kept by Investor’s Business Daily. “It’s just common sense. Obamacare gives businesses a powerful financial incentive not to hire more than 49 workers. What else did we think would happen?”

But economists say so far there has been no dip in employment as a result of Obamacare.

“There is no demonstrable effect through August 2013 on workweeks or headcounts,” said Mike Montgomery, the U.S. economist for international information and analytics firm IHS.

IHS is a global firm hired by Texas to provide in-depth and industry-specific analysis of labor trends to forecast job growth. Its most recent report, published last year, looked at a range of factors affecting employment numbers in Texas through 2014. It didn’t even mention the Affordable Care Act.

The company said that’s because it’s not clear how or even if the act will affect net employment across the country, or in Texas.

“There is no clear-cut answer nationally, and it’s even muddier state by state,” said spokesman Jim Dorsey.

Montgomery said that’s because the new law will create offsetting effects, and some firms will react by cutting jobs or hours and others could boost them.

“ACA can go either way on jobs [or] hours — all depending on the details,” said Montgomery. “You can raise hours for some at the expense of others and not affect the average workweek. Depending on the balancing, employment either goes up or down. There is no one-way answer.”

He said news reports have focused on isolated examples of companies pushing full-time workers to part-time schedules. “People cutting workweeks for 50 to 100 employees gets ink,” he said. “Cutting it for 25 and raising it for 25 does not.”

As of Wednesday, the tally kept by Investor’s Business Daily stood at 331 employers who have shed jobs or cut hours. Three quarters of the employers are governments or school districts, rather than private employers.

Several Texas companies figure in the list. But there are 330,000 firms registered in Texas, and most of them won’t come close to the 50-worker threshold and will, therefore, be exempt from Obamacare.

Just under 24,000 Texas firms have more than 50 workers.

For many of those larger firms, the law will mean no labor changes.

Chris Russell is CEO of Dallas-based Pillar Hotels and Resorts, which employs 5,500 workers across 200 hotels. His firm is included in the tally kept by Investor’s Business Daily, since The Wall Street Journal reported last year that Pillar expected to hire more part-time workers as Obamacare took effect.

But he said in an interview Thursday that he was misunderstood last year — and in any case, things have turned out much differently.

“We haven’t made any changes to our jobs or hours,” as a result of Obamacare, he said, and they don’t expect to. Most of his workers are full time, and most of the part-timers already get insurance, so long as they work 32 hours. The 30-hour threshold won’t mean much to Pillar, he said.

“You can’t manage your business around health care,” Russell said. “In the hospitality business, the only thing that determines whether you can hire more people is whether you fill more rooms. That’s what we focus on.”

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